The Principal-Agent Problem Exists When

question 68

Multiple Choice

The principal-agent problem exists when

• A)there is no command system in place.
• B)firms operate as sole proprietorships.
• C)agents do not act in the best interest of principals.
• D)principals do not act in the best interest of agents.
• E)the future value of money is more than its current value.

---

Definitions:

Obligation

A duty or commitment to perform or refrain from performing specific actions.

Manager

An individual responsible for directing and overseeing the work of others, making decisions, and ensuring the achievement of organizational goals.

Work Structures

The organized layout of tasks, responsibilities, and systems within a workplace, designed to achieve efficient operation and fulfill the organization’s goals.

Goals and Objectives

Targets and benchmarks that are set to guide actions and measure performance, often delineating the specific outcomes or achievements desired.